‘All of the Above’ is not working
If you view, as I do, the American economy running along on two major rails – cheap energy and cheap credit – it is easy for one to glimpse the truth on why American companies are not hiring, at least in this country. Everybody knows what happened to abundant credit for small business and families alike, but it took some explaining to get to the bottom of how the collapse that began in 2007 took form.
Energy is not so complicated, and should be center stage as the presidential campaigns settle in on the key issues of jobs, taxes and economic activity we push offshore. I cite here a current example of the reason that everyone should pay attention to studies, like the Green Scissors report on subsidies that are actually working against the recovery, the American economy in general, and are environmentally harmful to boot.
This compilation by Friends of the Earth, Taxpayers for Common Sense and our own R Street Institute underlines the inability of the Congress to get it right for almost any important backbone industry in the country, but especially in energy policy.
In order not to sound like Neanderthals opposing anything new – not that wind power and solar power are new – members of Congress who always tended to support the fossil fuel industry are touting an “all of the above” policy to indicate no antipathy toward new technology.
We don’t have to go way back to see how the problems with this approach evolved. In 2007, Congress passed, and President George W. Bush signed the Energy Independence and Security Act, which is mostly famous for banning the incandescent light bulb by 2014. Unfortunately, it also mandated a renewable fuel standard for cellulosic ethanol, which originally required 500 million gallons this year to be blended, by federal law, into gasoline, jet and other fuel. Even our Navy had to use so much, and was given $510 million last August to help them comply.
According to an article by Deroy Murdock in National Review Online last month, the Obama administration levied a $6.8 million fine on some oil refiners for not blending the mandated 6.6 million gallons of cellulosic ethanol biofuel into their products last year. The mandate for this year is even higher – 8.65 million gallons.
The culpability of the U.S Navy and these oil companies is questionable, however. There is no cellulosic ethanol to use. That’s right, even though a Kansas company got a grant in September to produce the stuff from corn, wood chips, switch grass or whatever other sources, it remains to date a fantasy fuel. Presidents Bush and Obama have poured a total of $1.5 billion in guarantees and outright grants into producing cellulosic ethanol, but we have yet to see a commercial product in any quantity. An Alabama company was supposed to produce 70% of the requirement, but it went…wait for it… bankrupt in 2010.
As the Wall Street Journal pointed out in a December 2011 editorial : “Congress subsidized a product that didn’t exist, mandated its purchase though it still didn’t exist, is punishing oil companies for not buying a product that doesn’t exist, and is now doubling down on the subsidies in the hope that someday it might exist.”
An articulate member of Congress explained at the CPAC conference in Washington earlier this year how Congress spent two days debating an issue where the federal funds attached were enough to run the federal government for about 20 hours.
We need a different kind of representation in Washington than we have been getting. Please pay attention to the coming national debate on federal debt, which may be a separate presidential joust. It deserves to be.
